Training and Establishment Survival

Training decisions are affected by beliefs about the returns to training, surrounding which firms face considerable uncertainty. We model the consequent association between training, profitability and establishment survival. We propose a plausible definition of optimism about training effectiveness, and show that more optimistic firms train more. We then present estimates of the relationship between training and the likelihood of medium-term commercial survival. We find that increased training of non-manual workers in large establishments is associated with a greater chance of survival; however, disaggregation reveals that the association differs across occupational groups. In smaller establishments, increased training for Craft and Technical workers is associated with better chances of survival, while for Professional workers the opposite effect is found.